Party time has begun for thrifts in California.
With adjustable-rate loans more popular and home purchases on the rise, thrifts in California are continuing to rapidly gain market share from mortgage companies and commercial banks.
According to a survey by TRW Redi Property Data, a Riverside. Calif., provider of real estate statistics, California thrifts originated $16 billion home mortgages in the first five months of this year. That represents a 20.2% market share, up from 18.9% during the same period in 1993.
"The reason the overall shift is going up is because thrifts have a dominant position in adjustable-rate mortgages," said Robert R. Davis, chief economist at the Savings and Community Bankers of America.
Higher interest rates make adjustable-rate loans more attractive. Meanwhile, higher rates make fixed-rate loans, the bailiwick of mortgage companies, too costly.
Mr. Davis said the popularity of adjustable-rate mortgages benefit thrifts, which can portfolio the loans.
Many thrifts are offering extremely competitive adjustable-rate mortgages, another surefire way to gain market share in this economic environment, he said. "Thrifts are gaining market share almost everywhere because of the demand for ARMs," the economist said.
In California, adjustable-rate mortgages are making up more of the origination pie, according to TRW Redi. From March to May the percentage of ARMs out of originations in the Golden State climbed 11%.
Purchase lending is also up in California, according to TRW Redi. And thrifts are benefiting most.
In the first five months of 1994, 33% of the loans originated by thrifts were purchase mortgages, according to TRW Redi. That's compared to 25% at mortgage companies and commercial banks.
Among those Californian thrifts that are gaining the most market share are Plaza Home Mortgage Bank, in Santa Ana, and ITT Federal Bank, in Irvine.
Mr. Davis said thrifts beyond California seem to be gaining market share, too. He estimates thrifts will capture 30% of the nationwide lending market this year, up from 22% last year.